Federal Solar Tax Credit 2026: What Changed and What You Can Still Claim

If you're planning to go solar in 2026, here's the update you need before you run any savings math: the 30% federal residential solar tax credit — the one that's been part of nearly every solar pitch for over a decade — ended for new purchases on December 31, 2025. If you installed solar before that date, you may still be able to claim it on that tax year's return. If you're buying in 2026, it no longer applies. Here's exactly what changed, who's affected, and what incentives are still on the table.

What Happened to the Federal Solar Tax Credit?

The federal solar tax credit — officially called the Residential Clean Energy Credit under Section 25D of the tax code — used to let homeowners deduct 30% of the cost of installing a solar energy system from their federal income taxes. It was originally scheduled to run at that rate through 2032 under the Inflation Reduction Act. That changed in July 2025, when the One Big Beautiful Bill Act repealed the residential credit years ahead of schedule: it no longer applies to any system placed in service after December 31, 2025.

In plain terms: if your solar or battery system was installed and operational on or before December 31, 2025, you can still claim the 30% credit on that year's tax return. If you're purchasing and installing a system in 2026 or later, the federal credit is simply not available — no exceptions for residential purchases.

If You Installed Before 2026: How to Still Claim It

If your system was placed in service in 2025 or earlier and you haven't claimed the credit yet, you'll need IRS Form 5695 (Residential Energy Credits) attached to your Form 1040 for that tax year. Gather your installation contract, final invoice, and proof of payment, and keep those records for at least three years in case of an audit. This is a dollar-for-dollar, non-refundable credit — it can reduce your tax liability to zero but won't generate a refund by itself. If the credit exceeds what you owed that year, you can carry the unused portion forward to future tax years, which is worth checking even if you assumed you'd already used it all.

If you're not sure whether your 2025 (or earlier) install still qualifies, or whether you've already fully claimed it, a tax professional or a quick conversation with Solar Care Connect can help you figure out if there's money still on the table.

Buying Solar in 2026? What Still Saves You Money

With the federal residential credit gone, the real savings in 2026 come from two places: state-level incentives, and how you finance the system. Several states Solar Care Connect serves still have meaningful programs that are completely unaffected by the federal change — Arizona's state solar tax credit and sales tax exemption, Florida's property and sales tax exemptions, Colorado's property and sales tax exemptions plus utility rebate programs, and California's NEM 3.0 net metering and SGIP battery rebates. None of these were touched by the federal repeal.

There's also one real exception worth knowing: homeowners who go solar through a lease or Power Purchase Agreement (PPA) don't own the system, so they were never eligible for the residential 25D credit anyway — the leasing company claimed it. That company may still be eligible for a separate commercial credit (Section 48E) if the system is placed in service by the end of 2027, and some pass part of that savings along through lower lease or PPA rates. It's worth asking any installer offering a lease or PPA whether that's reflected in your quote.

Still Getting an Electric Bill After Going Solar? Here's Why It Matters

One of the most common frustrations we hear from solar homeowners is this: 'I have panels — so why am I still paying an electric bill?' If that sounds familiar, you're not alone. Many solar systems are undersized, improperly configured, or lack battery storage, which means you're still drawing power from the grid during peak hours or at night.

This is where a system review matters more than ever now that the federal credit is gone — if your system isn't performing the way it should, you no longer have that 30% cushion to fall back on. Homeowners in Arizona, Texas, Florida, Colorado, and California often find that a simple audit of their current setup reveals significant energy inefficiencies — or opportunities to add battery storage and eliminate their electric bill entirely.

Solar Care Connect offers free solar consultations to help homeowners in all five of these states evaluate their current systems or design a new one that actually meets their energy needs. There's no pressure and no obligation — just clear, honest information so you can make the best decision for your home and your finances.

Who Should Talk to a Tax Professional?

If you installed solar at your primary or secondary U.S. residence on or before December 31, 2025, and you own the system outright or through a solar loan (not a lease or PPA), you're the person most likely to still have a claim available. If you had little or no federal tax liability in 2025, remember the carryforward provision lets you apply the remaining credit in future years — many homeowners don't realize they can still use it.

If you're in Arizona, Texas, Florida, Colorado, or California and aren't sure where you stand — whether that's an unclaimed 2025 credit or figuring out what 2026 incentives actually apply to a new purchase — Solar Care Connect's free consultation can walk you through it in plain language. No tax jargon, no confusing fine print, just practical answers.